Most UK Insurers, Banks Unprepared for Risks of Climate Change

The Bank of England faces an uphill climb to get the finance industry ready for one of its biggest threats: the climate.

About 80% of senior finance executives believe their firms “lack well-developed strategies to manage the risks of climate change,” according to a poll of around 700 U.K.-based financiers by executive search firm Odgers Berndtson.

“Every single asset on the planet will have a different value in a world of net zero,” Sarah Breeden, executive director at the Bank of England, said in a statement Thursday. “This affects infrastructure, properties, transport and even agriculture –- and so the need to transition creates a very broadly-based risk.”

The Bank is holding a consultation, led by Breeden, on stress-testing lenders and insurers on their exposures to global warming and the risks associated with a shift to a lower-carbon economy. She addressed the topic with more than 100 finance leaders at an event hosted by Odgers in London.

Once dismissed as a social or scientific concern, the effects of rising global temperatures are becoming financial risks. Larry Fink, chief executive officer of BlackRock Inc., said earlier this month climate change had become a “defining factor in companies’ long-term prospects” that will cause a “fundamental reshaping of finance.”